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Home My WebLink AboutS- 3 Resolution for Charter Communications Entertainment ,` w o ,, t1 9 The City o Azusa* , * f � 11. 213 E. Foothill Blvd., P.O. Box 1395, Azusa, California 91 -1 14/FOR (818) 812-5238 ill Henry Garcia City Administrator AGENDA ITEM MEMORANDUM TO: HONORABLE MAYOR AND CITY COUNCIL FROM: GINNY DADAIAN,ADMINISTRATIVE ANALYST 50-/I) /I VIA: HENRY GARCIA, CITY ADMINISTRATOR(%J DATE: OCTOBER 6, 1997 SUBJECT: RESOLUTION FOR CHARTER COMMUNICATIONS ENTERTAINMENT, TO CEASE AND DESIST INCREASE IN RATES AND CHARGES FOR BASIC SERVICE AND OTHER RATES Attached for your adoption is the Resolution ordering and directing Charter Communications Entertainment II,L.P. to cease and desist in increasing its rates and charges for the basic service tier and other rates and charges subject to the jurisdiction of the City of Azusa pending submittal of appropriate regulatory forms mandated by the Federal Communications Commission(FCC). One of the main reasons that the City is demanding that Charter cease and desist in increasing its rates and charges is that the FCC has not accepted nor approved the petition for the increase. The petition is a process that Charter can seek certification by the FCC and now is subject to Effective Competition and thus its rates are no,longer subject to the regulatory jurisdiction of the City or Commission. Charter's rates will increase starting November 1, 1997. However,with the adoption ofthis Resolution,the City will be in the best position to order refunds ifthe Federal Communications Commission ultimately agrees with our contentions. Pacific Bell Digital TV has entered the"cable world"in the Los Angeles area,however they have not come to the City of Azusa as of yet. Charter states because Pac Bell has entered into their franchise area they have submitted an effective competition filing with the FCC and will now be setting rates based on the cost of providing service and marketplace competition. The Telecommunications Act of 1996 now allows for deregulation of rates when a local telephone company provides a multi-channel video service in our franchise area. But as you may have read in the article from the Los Angeles Times, Business Section of September 30, 1997, in regards to the FCC and troubles they have had with this Act, "remains a political lightening rod more than a year and a half after its enactment". The landmark measure was intended to open up the nation's heavily regulated telephone and broadcasting industries to greater competition. But since its passage, long-distance telephone and cable rates have risen markedly, and little or no local telephone competition has emerged in most residential areas. Please note that we will have our special legal counsel for cable in attendance at the City Council meetings because of the complexity of the issue. And staff has notified Charter Communications of the proposed Resolution. RECOMMENDATION It is recommended that the Azusa City Council adopt this Resolution and direct Charter Communications Entertainment II,L.P.to cease and desist in increasing its rates and charges for the basic service tier and other rates. GD/tc Nominee for FCC Top Job to Face Heanngslightro ' l ■Telecom:The L.A. native has said little publicly about the politically charged issues that ". Senators are likely to bring up... _.,. ByJUBESHIVER Jr. TIMES STAFF WRITER - - - WASHINGTON—William Earl Ken- nard, who would be the first African • American to serve as the nation's top telecommunications regulator, is regarded as that rarest of Washington bureau- crats:a bright and lik- able public servant who has deftly side- 'IOW, i,. stepped political land mines. , '''.. i But Kennard,a Los Angeles native who has served as the Fed . eral Communications / Comission's general William E.Kennard counsel since 1999,will find himself again ' walking on explosive ground starting Wednesday,when the Senate begins politi- • tally,charged confirmation hearings on his nomination. During •his tenure at the FCC,Kennard, 90, has questioned the increasing concen- Please see FCC,D25 LOS ANGELES TIMES . _ proval. Kennard has already won when the U.S.Court of Appeals in 'FCC The Senate Commerce Committee the endorsement of former nemesis St.Louis ruled that states have the is scheduled to take up Kennard's Hollings, as well as a number of right to set prices and service ��LI Continued from Dl confirmation on Wednesday, one other,senators. Kennard declined standards for phone companies op- day after considering three commis- to be interviewed. crating within their borders. tration of media holdings, cham- step i:Tak pinned greater minority ownership sioner nominees—Harold Furcht- "Everybody that I know of in the Besides having to grapple with the lobby at and pondered whether to rein in gott-Roth,Michael Powell and Glo- industry is very supportive of Bill Congress and the states in his new office musk ria Tristan. Kennard," said Robert Johnson, job, Kennard also would face a step 2:16 broadcasters' 1st Amendment The fireworks over Kennard have chairman of BET Holdings Inc., potentially delicate showdown per grafi rights. subsided somewhat since last the parent company of the Black witII h the Gore Commission—a Step3: Yet Kennard,who has close ties numbero to the White House,as well as to month, when Sen. Ernest F. Holl- Entertainment Television cable blue-ribbon panel being assembled Step 4:i ings (D-S.C.), the committee's channel. "I think the general per- by the White House to develop number, fellow Yale Law School alumnus ranking Democrat, and the Con- cep ion is that Bill is an honest public interest standards for digital and departing FCC Chairman Reed gression Black Caucus threatened broker, that he doesn't have a television. Thepanel is likel to One o Hundt, remains something of an y enigma,having said little about his to oppose the nomination and throw political ax to grind." take up such controversial issues N 0 views on the key issues now before th0 eir support behind former Holl- But Kennard is active politically, as whether TV broadcasters should the agency. ings aide Ralph B.Everett,a Wash- buttonholing voters in.support of be obligated to provide free air The Senate panel"will ask Bill in ton communications lawyer. his party. Johnson said he saw time to political candidates. to lay out his agenda,and that's a", But the nomination hearings are Kennard on a Denver street corner But Kennard,whose first job out tightrope for him," said Andrewnevertheless expected to be among last year campaigning during his of law school was with the National Barrett, a former FCC commis- the most closely watched in Wash off hours,handing out literature for Assn.of Broadcasters,brings wide sioner and Kennard supporter. ington. Their prominence'is a re- President Clinton and Vice Presi- intellectual and political savvy to _ Kennard,added Barrett,"can't dis- flection of the clout the FCC wields dent Al Gore. the table as well as valuable con- tance himself too far from the overseeing the burgeoning telecom- As FCC general counsel, Ken- nections with industry and political White House . . . and he is not m.unications industry,which is hav- bard has led a 50 member legal insiders. ,. completely without a track record ing a huge and growing impact on staff that has won an impressive Lana Corbi,executive vice presi- as genera z. FCG." voters and the nation's economy. 85% of its cases in federal appeals dent of network distribution at " ' "The FCC is at the center of the court.But Kennard's office has also Fox, and BET President Deborah i A F' °,4 os complex issues K lvould face as FCC chief information revolution;'said Gigi B. lost •some crucial cases. Lee are Kennard's cousins. And wo 'liatidiin#g math of Sohn,executive director of the Me- Congress dealt Kennard a blow' Clinton intimate and high-profile the Telecommunieatioir Reform di Access Project, a Washington, when it eliminated a controversial Washington lawyer Vernon Jordon Act ,°whit ' •sins a D.C.,watchdog group active in com- program to give big media owners is a close family friend. political than a munications issues. -"No'other generous'tax breaks on capital Some members of Kennard's old year. after lta etme tt' agency will play as large a role in gains if they sold any communica- law firm of Verner,Liipfert,Bern measure,was in- determining'what people will see tions properties to minorities,Ken- hard, McPherson & Hand have ten s' ••• •' `. the" on's and hear over the next generation." bard had testified at least twice on stepped up to the plate for him heavily regulated •E d' "I think'you'd have to say this Capitol Hill in 1994 in support of Last week, several firm members b , . itidustrte,...., eater° new commission is the highest in the program. held,:a mock nomination hearing to compee i ge, quality and experience ever assem- Kennard has also argued in writ- help Kennard prepare for the pro- $ low distance telephon cable bled," Hundt said. 'Bill is a com- ing that broadcasters' 1st Amend- ceedings. TV .i ,"and passionate and brilliant person who ment rights are not as broad as "Bill is very low-key and judicial little o!' " ;; ' peti- has a deep awareness of all parts of those of newspapers. Broadcasters in his thinking,"said Riley Temple tion has emerged in most-residential the American quilt. His challenge have been seeking to turn around a lawyer at the firm who partici markets. will be to break out of the noose of decades-old government reg a- paled in the mock session. The hearing is expected to ex lobbying . . . and implement the tions that limit their freedom in But Temple and other supporters , emphasize that Kennard is a ca amine Kennard's plans to address full policy of the [telecommunica- programming. P Sit those issues,probing how he plans tions]law." More recently,the FCC has lost pable-enough lawyer to prevail on to subdue escalating cable TV rates, Kennard, who has widespread court decisions over agency rules his own merits. 'I can't-think of 6. his ideas on restoring credibility to industry and political'support, is aimed at opening local telephone any FCC commissioner who,at the • FCC auctions'of airwaves and his expected to weather the question- networks to greater competition. time of his appointment, has been intent on keeping rural telecommu- ing and win the committee's ap- The latest setback came in July, as qualified." CHARTER COMMUNICATIONS (H i(ilit9 (A>nn('rtir>n August 25, 1997 Henry Garcia City of Azusa 213 E. Foothill Blvd. Azusa, CA 91702-1395 Dear Mr. Garcia: Since October 1993 we have computed our basic, expanded, installation and equipment rates according to rules and formulas developed by the Federal Communications Commission as required by the Cable Act of 1992. The Telecommunications Act of 1996 now allows for deregulation of rates when a local telephone company provides a competitive multi-channel video service in our franchise area. This has occurred with the launch of Pacific Bell Digital TV in the greater Los Angeles and Orange County areas. Therefore, Charter has submitted an effective competition filing with the FCC and will now be setting rates based on the cost of providing service and marketplace competition. With the completion of the new cable system we are adding 14 channels to the line-up as discussed in our recent meeting. The channel additions are as follows: Basic TV Food Network KHSC KZKI Expanded Basic Cartoon Network The History Channel The Learning Channel Leased Access (days)/Fox Sports West 2 (eves) C-Span II (days)/Bravo (eves) CNBC TV Land The Family Channel Fox Sports Americas Turner Classic Movies Premium HBO2 (at no extra charge to HBO customers) 2215 West Mission Road • P.O. Box 1451 •Alhambra,California 91802-1451 It is the addition of the channels that makes it necessary to adjust the rates to reflect the increase in programming costs. Also we will begin passing through the external cost for providing the $100,000 equipment grant to the City of Azusa. Although the channels are being added immediately as customers are transferred to the new system, we will not be changing the rates until November 1, 1997. Effective with November billing cycles, the Basic rate will remain $11.28. The Basic External cost will be $0.12, which is an increase of$0.12. The Expanded rate will increase from $10.60 to $14.60, which is an increase of$4.00. The net change in rates for the expanded basic customer is an increase of$4.12. There will be no change in equipment rental and installation charges. For many customers who have optional premium services, this increase will be more than offset with the introduction of Charter's Customer Advantage Plan. This new package will reduce the cost of premium service packages by as much as $13.95 per month. We are also providing HBO2 to all HBO customers at no extra charge. We value our relationship with you in providing useful services to your community and pledge to continue to provide them at competitive rates. We have introduced many customer-friendly programs such as same day installation and service, 24 hours a day/7 days a week call center, GM hotline, on-time guarantees, thank you cards, and even "oops" cards when we fall short of providing good customer service. Please do not hesitate to call me at 626-537-6115 if you have any further questions. Sincerely, ,'r• ,1"j /jr yt�/ vZ, Melvin L. Matthews Director of Government and Community Relations cc: Ginny Dadaian, Cable TV Administrator Mayor and members of the City Council